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1997). Functional values (tangible aspects) are physically presented or can be seen in a more visualised way,
experienced, or measured in some kind of process (Mudambi et al., 1997). According to Sweeney and Soutar
(2001), the functional value is determinded by the rational and economic valuations of the consumers, and the
service quality forms this dimension. Sheth et al. (1991) defined the functional value as a perceived utility of the
service attributes. The emotional value consists of feelings or the affective states generated from the experience
of the consumption. Snchez et al. (2006) developed six dimensions of the perceived value. Four of them
correspond to dimensions of the functional value: functional value of the establishment, functional value of the
contact personnel, functional value of the service quality and functional value of the price. The two remaining
dimensions refer to the affective dimensions of the perceived value: the emotional and social value.
Customer loyalty is defined as a deeply-held commitment to rebuy or repatronize a preferred product
or service consistently in the future, despite situational influences and marketing efforts having the potential to
cause switching behavior (Oliver, 1997). Gremler and Brown (1996) offered one definition of customer loyalty
that is related to our purpose in this study: the degree to which a customer exhibits repeatitive purchasing
behavior from a service provider, possesses a positive attitudinal disposition towards the provider and considers
using only this provider when a need for this service exists which meets and sometimes even exceeds customer
expectations (Teich, 1997). Customer loyalty is the key factor under consideration of each and every firm (Vesel
and Zabkar, 2009). Customer loyalty is the key and important competitive advantage in current market
situations (Lin and Wang, 2006). According to Bloemer and Kasper (1995), loyalty is interpreted as true loyalty
rather than repetitive purchasing behavior, which is the actual re-buying of a brand, regardless of commitment.
Zeithaml et al. (1996) states loyalty is a multi-dimensional construct and includes both positive and negative
responses. However, a loyal customer may not necessarily be a satisfied customer. Customer loyalty is measured
by word-of-mouth, price insensitivity and purchase intentions (Bloemer and Odekerken-Schrder, 2002).
3. Hypotheses
In this study, 8 (eight) hypotheses examined in traditional markets in Pontianak are as follows:
H1 : Service Quality has a significant effect on Emotional Value
H2 : Service Quality has a significant effect on Functional Value
H3 : Service Quality has a significant effect on Customer Loyalty
H4 : Product Quality has a significant effect on Emotional Value
H5 : Product Quality has a significant effect on Functional Value
H6 : Product Quality has a significant effect on Customer Loyalty
H7 : Emotional Value has a significant effect on Customer Loyalty
H8 : Functional Value has a significant effect on Customer Loyalty
4. Research Methodology
The type of research conducted in this study is a confirmatory research or conclusive research. According
Kuncoro (2009:89-90) confirmatory research or conclusive research is a research that aims to test or to prove
something and to assist the researcher in choosing a particular further action. The population in this study
consists of a set of people or consumers who shop in the traditional markets in Pontianak which is divided into
seven clusters of traditional markets. The population criteria are consumers or shoppers who act as decision
makers (deciders) while shopping in traditional markets in Pontianak. The number of samples used in this study
is a total of 120 people. The sampling method used is probability sampling with the specific use of proportional
cluster random sampling. The analysis technique used is the analysis of Structural Equation Modeling (SEM)
with AMOS (Analysis of Moment Structure).
In this study, five variables and 24 indicators were used (Likert scale 1-5), namely:
1. Service Quality (8 indicators)
2. Product Quality (4 indicators)
3. Emotional Value (4 indicators)
4. Functional Value (4 indicators)
5. Customer Loyalty (4 indicators)
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X1.1
Y1.1
X1.2
Y1.2
Y1.3
Y1.4
X1.3
X1.4
X1.5
Service Quality
Emotional Value
H1
(X1)
(Y1)
H7
Y3.1
X1.6
H2
Y3.2
X1.7
Customer Loyalty
(Y3)
X1.8
H4
Y3.4
X2.1
X2.2
X2.3
Y3.3
H8
Product Quality
(X2)
Functional Value
(Y2)
H5
X2.4
Y2.1
Y2.2
Y2.3
Y2.4
H6
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H5: Product Quality has an insignificant effect (not significant) on Functional Value, this is proven by
the value of the path coefficient = 0.188; CR = 1.532 and p = 0.125 > 0.05. The results of this study contradict
the research conducted by Yan et al. (2011) and Choi and Kim (2013) that the product quality significantly
influences the functional value. The findings of this study are also contrary to the opinion of Oliver (1997) which
states that the product quality is one of the determining factors of the customer satisfaction. From the consumers
perspective, the value of a product is a product quality that can be enjoyed by consumers at the expense of a sum
of money or other resources.
H6: Product Quality has a significant effect on customer loyalty, this is proven by the value of the path
coefficient = 0.562; CR = 4.073, and p = 0.000 < 0.05. The findings of this study support the results of research
conducted by Lee et al. (2009), Nwokah (2009), Yeng and Kamariah (2013) that the product quality has a
significant effect on customer loyalty. The findings of this study also support the idea of Griffin (2002) that in
order to gain loyal customers, the company must provide value to customers by continuously improving, fixing
or even changing the products or services to increase benefits for customers.
H7: Emotional Value has a significant effect on customer loyalty, this is proven by the value of the
path coefficient = 0.838; CR = 6.170 and p = 0.000 <0.05. The results of this study support the empirical study
conducted by Wong (2004); Roig et al. (2009), and Koller et al. (2011) that the emotional value has a significant
effect on customer loyalty. However, the results of this study contradict or do not support the research conducted
by Lin et al. (2009) and Hu and Chuang (2012) that the emotional / hedonic value has insignificant effect on
customer loyalty. The results of this study are also in line with the opinion of Barnes (2001:9) which states that
the relationship between value and customer loyalty has demonstrated that customers with high loyalty feel the
emotional bond with the company. Emotional bond is what makes the customers loyal and encourages them to
continue to make purchases of the companys products.
H8: Functional Value has an insignificant effect (not significant) on customer loyalty, this is proven by
the value of the path coefficient = 0.062; CR = 0.285, and p = 0.775 > 0.05. The findings of this study contradict
the results of research conducted by Roig et al. (2009), Koller et al. (2011), Lin et al. (2009), and Hu and Chuang
(2012) that the functional value has a significant effect on customer loyalty. The findings of this study are also
not in line with the opinion of Scott Robinette (2001) that the success and growth of the company depends on the
relationship between value, profits and customer loyalty.
Structural Path
Service Quality (X1)
Emotional Value (Y1)
Service Quality (X1)
Functional Value (Y2)
Service Quality (X1)
Customer Value (Y3)
Product Quality (X2)
Emotional Value (Y1)
Product Quality (X2)
Functional Value (Y2)
Product Quality (X2)
Customer Value (Y3)
Emotional Value (Y1)
Customer Loyalty (Y3)
Functional Value (Y2)
Customer Loyalty (Y3)
TABLE 1
RESULTS OF PROPOSED RESEARCH MODEL
Critical Significance
Factor
Ratio
Probability
Loading
(CR)
(p)
Results
0.540
3.824
0.000
Significant
0.737
4.461
0.000
Significant
0.969
3.504
0.000
Significant
0.245
1.995
0.046
Significant
0.188
1.532
0.125
Not Significant
0.562
4.073
0.000
Significant
0.838
6.170
0.000
Significant
0.062
0.285
0.775
Not Significant
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FIGURE 2
RESULTS OF PATH COEFFICIENTS OF THE RESEARCH MODEL
6. Conclusion and Implications
Based on the results of hypotheses testing about the Impact of Service Quality and Product Quality towards
Customer Loyalty through Emotional and Functional Values in Traditional Markets in Pontianak, it can be
concluded that from 8 hypotheses formulated in this study, there are 6 hypotheses whose results show a
significant effect, such as H1 (Hypothesis 1), H2, H3, H4, H6 and H7, while the results of the other two
hypotheses testing, H5 and H8, show insignificant effect. The six hypotheses which show significant effect are
as follows: the influence of Service Quality on Emotional Value, Service Quality on the Functional Value,
Service Quality on Customer Loyalty, Product Quality on the Emotional Value, Product Quality on Customer
Loyalty and Emotional Value to the Customer Loyalty. The two hypotheses which show no significant effect are
as follows: the impact of the Product Quality on Functional Value and te Functional Value to Customer Loyalty.
The implications of the results of this study is that traders in the traditional markets in Pontianak should need to
always continue improving the service quality for their customers who shop in the traditional markets in
Pontianak. They also need to pay attention to, and improve the quality of the products sold, both related to
freshness and cleanliness (hygiene), and keep the environment clean.
A particular reminder to the Government of Pontianak, in this case the Department of Industry,
Department of Trade, Department of Cooperatives and Small and Medium Enterprises in Pontianak as the
managers and administrators of the seven traditional markets in Pontianak, they should be able to create and
organize neat, beautiful, clean, and safe traditional markets, as well as providing adequate vehicle parking space.
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